Following on from Goodman Group (ASX: GMG), DEXUS Property Group (ASX: DXS) and Mirvac Group (ASX: MGR) last week, investors today have the opportunity to sound out competitor GPT Group's (ASX: GPT) interim 2015 results.
Operating with its financial year the same as its calendar year, here's what GPT had to say about its most recent six months.
The What:
- Revenue up 9% to $120.9m
- Net Profit After Tax (NPAT) up 75% to $421.9m (mostly due to $146m of property revaluations)
- Funds From Operations (FFO) of 14.15 cents per share, up 6.7% on prior corresponding period (pcp)
- Dividends rose 4.8% to 11 cents per share (yield of 4.7%)
- Net Tangible Assets (NTA) per share of $4.03
- Net debt to NTA of 26.6%, up 0.3% on 2014
- 4% occupancy, Weighted Average Lease Expiry of 5.3 years for portfolio; tenant retention rate of 66% in 2015
So What?
GPT enjoys a balanced portfolio and has been another strong performer in the Real Estate Investment Trust (REIT) space in the past 12 months. With 50% of its portfolio exposed to the retail sector, investors will be pleased to see income rose 3.2% on the previous year, while specialty store sales – a key measure of growth – rose 5.9% for 2015, compared to 3.6% in 2014. Occupancy was a sterling 99.4%.
The next largest segment, office, experienced even stronger performance with like-for-like income rising 8.1% on occupancy of 95%, also very strong. The logistics segment was below par with income up 0.8% and occupancy at a decent 92.8%.
Lengthy Weighted Average Lease Expiry (WALE) of 5.3 years is better than Goodman or Dexus and GPT's occupancy also comes out on top. Curiously, unlike Goodman, GPT does not appear to be betting on a fall in property values in the future as its gearing remains fairly constant.
Now What?
Management also reaffirmed their intention to continue targeting 'total returns' (comprising income growth and growth in property value) of greater than 9% per annum. Given that earnings per share are growing at between 5% and 6% p.a. I can see this creating some problems for management forecasts if asset values do fall over the near to medium term.
I am a little bearish on property values so this may be immaterial for an investor that does not share my views. On the whole however, GPT is one of the cheaper property trusts, trading at a 14% premium to its net tangible assets. With its record of performance it could be a reasonable purchase for dividend-seeking investors.
